PolyOne Sees Solid Gains in Third-Quarter 2013 as Acquisitions Boost Performance of Specialty Products

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Researched by Industrial Info Resources (Sugar Land, Texas)--PolyOne Corporation (NYSE:POL) (Cleveland, Ohio), a leading provider of specialized polymer materials and services, reported mostly positive results for the third quarter of 2013, driven by two major acquisitions and solid growth in the Specialty Platform and Distribution segments. Net income was reported to be $23 million, a 4.17% decrease from third-quarter 2012.

Total sales stood at $1.01 billion, a 42.56% increase from the same period last year. Much of the gains were attributed to PolyOne's acquisitions of Spartech Corporation (Clayton, Missouri) in March and Glasforms Incorporated (Birmingham, Alabama) late last year. Spartech is a plastic products producer, and Glasforms is a producer of glass and carbon fiber-reinforced polymers, as well as advanced composite products. Spartech's custom sheet, rollstock and packaging technologies businesses became PolyOne's Designed Structures and Solutions business, part of its Specialty Platform segment. Glasforms was merged into the Global Specialty Engineered Materials business, also part of the Specialty Platform segment.

Despite the slight dip in income, PolyOne executives say the company has now seen four straight years of substantial growth. The beefed-up Specialty Platform was cited as the driver behind much of the quarter's gains, accounting for almost two-thirds of segment operating income. The company expects to see a total of $65 million in profit expansion from the Spartech acquisition by the end of 2015.

Capital expenditures for the first nine months of 2013 were reported to be $41.8 million, compared with $33 million in the same period last year.

As part of its North American Chemical Processing Project Database, Industrial Info is tracking the $2 million expansion of a plastic resins plant in Seabrook, Texas. The project involves expanding production buildings, increasing elevations, adding roofs to tanks, and performing civil and concrete work. The equipment to be installed is being relocated from three plants that are set to close. The expansion is scheduled to be completed in the second quarter of 2014.

"While revenue growth was most heavily influenced by our recent acquisitions, operating income growth was almost entirely organic," said Robert Patterson, the executive vice president and chief operating officer of PolyOne, in a conference call. "Our mix improvement strategy continues to pay off."

Altogether, Industrial Info is tracking progress at 33 operational PolyOne facilities worldwide, including two in Canada, two in Spain, and one each in Mexico and France.

All three operating segments reported substantial gains in sales and operating income:

• The Specialty Platform segment reported $596.6 million in sales, compared with $327.7 million in third-quarter 2012, and $55.3 million in operating income, compared with $31.7 million in the same period last year.
• The Specialty Platform segment includes three businesses: Global Specialty Engineered Materials; Global Color, Additives and Inks; and Designed Structures and Solutions. The latter business was not part of PolyOne in third-quarter 2012; it added $187.8 million in sales and $10.9 million in operating income to the total.
• The Performance Products and Solutions segment reported $176.6 million in sales, a 12.67% increase from third-quarter 2012, and $14.3 million in operating income, a 16.26% increase.
• The PolyOne Distribution segment reported $275 million in sales, an 8.1% increase from the same period last year, and $16.6 million in operating income, a 1.22% increase.

PolyOne executives noted that the fourth quarter of any year typically is the weakest, but expect organic growth to continue nonetheless, with ongoing benefits from the acquisitions.

"Our Specialty [Platform] mix of earnings has never been stronger or more profitable," said Stephen Newlin, the chairman, president and chief executive officer of PolyOne, in the conference call. "We're in markets and applications that are not only delivering now, but are aligned with strategic megatrends that have us extremely well-positioned for the future. Health care is probably the best example. Health care represented about $100 million in sales in 2006, and is now on pace to exceed $400 million in revenue this year, with improved margins."

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